Cars and Trucks Plc Owns an Engine Testing Machine Which

question 42

Multiple Choice

Cars and Trucks Plc owns an engine testing machine which was purchased for €120 000.After 3 years of use the machine had accumulated depreciation of €58 560 but was revalued to €80 000.Two years later the machine was sold for €60 000 and had accumulated depreciation at the time of sale of €36 800.What journal entries would be required to record the sale of the machine in accordance with IASB 16 requirements?

• A) \(\begin{array}{|c|l|r|r|}
• \hline \mathrm{Dr} & \text { Cash at bank } & 60000 & \\
• \hline \mathrm{Cr} & \text { Proceeds from testing machine sold } & & 60000 \\
• \hline & & & \\
• \hline \mathrm{Dr} & \text { Accumulated depreciation } & 95360 & \\
• \hline \mathrm{Dr} & \text { Carrying amount of testing machine sold } & 24640 & \\
• \hline \mathrm{Cr} & \text { Testing machine } & & 120000 \\
• \hline
• \end{array}\)
• B) \[\begin{array} { | l | l | r | l | }
• \hline \mathrm { Dr } & \text { Cash at bank } & 60000 & \\
• \hline \mathrm { Cr } & \text { Profit on sale of land } & & 35360 \\
• \hline \mathrm { Cr } & \text { Testing machine } & & 24640 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | l | r | r | }
• \hline \mathrm { Dr } & \text { Cash at bank } & 60000 & \\
• \hline \mathrm { Cr } & \text { Proceeds from sale of land } & & 60000 \\
• \hline & & & \\
• \hline \mathrm { Dr } & \text { Carrying amount of land sold } & 43200 & \\
• \hline \mathrm { Dr } & \text { Accumulated depreciation } & 36800 & \\
• \hline \mathrm { Cr } & \text { Testing machine } & & 80000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | l | r | l | }
• \hline \mathrm { Dr } & \text { Cash at bank } & 60000 & \\
• \hline \mathrm { Dr } & \text { Accumulated depreciation } & 36800 & \\
• \hline \mathrm { Cr } & \text { Profit from sale of testing machine } & & 16800 \\
• \hline \mathrm { Cr } & \text { Testing machine } & & 80000 \\
• \hline
• \end{array}\]

---

Definitions:

Time-Driven

Refers to activities or processes whose scheduling or execution is strictly influenced by the passage of time.

Total Minutes

The complete count of minutes accumulated across a specified timeframe, often used in time tracking or productivity analysis.

Time-Driven

Refers to activities or processes that are scheduled or organized based on time, often used in activity-based costing systems.

Activity-Based Costing

A system of costing that divides overhead and indirect costs among products and services based on the activities they perform.